TVO Market Barometer 12/7/16


One by one the “blow-off” top callers are falling by the wayside as the market continues to soar, and now that the Transports have broken a 2 year high, “Dow Theory” buy programs will light up screens like X-mas trees as we approach year-end. This is also where a lot of folks love to say “This never ends well,” (which basically means they missed buying the dip), but what they’ll find is that searching for equality or restitution in this kind of bull market is very much a vain effort.

But is there enough volume to sustain the new leg up? Even before the Transports broke out, the ingredients were already in place. There aren’t many days when volume rises more than 100% and a week ago Monday (11/28) was one of them. Historically big moves follow such occurrences, and even though the price of SPY barely budged during the session, the volume surge ignited the 2 day shakeout and subsequent rise that followed… once again a prime example of how volume precedes price. Our whole trading methodology is based on the premise that dynamic volume action very often signals significant price moves to come. And it shows as right now our pre-election SPY calls are up over +85%.

Come on, America hasn’t even become great again yet…This kind of rally must mean we’re in a bubble right? Well, with the January Effect on the horizon, the under invested chasers are just getting started and will continue to chug along… at least until the last of the bears standing start to hop on board the train. -MD

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